Question

Betty consumes leisure and food and both are normal goods. a. Show graphically what would happen to the number of hours that Betty will work if she sees an increase non-labor income. b. Show with a graph and explain how Betty’s hours worked can decrease if she sees an increase in wages.

Answer 1

a ) leisue Food No of how incheon is won Income

a) From the first graph, it can be seen that if non labour income income increases, then at the same amount of food can be consumed at a particular level of income and since the non labour income is increasing, the people tend to work less for the same amount of income with which leisure increases.

b) If the wages increases, from the graph it can be seen that at a Particular level of income the number of hours would decrease to achieve the same amount of income.